Resort Conference March 21st, 2006

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Resort ConferenceMarch 21st, 2006
Jan D. Freitag, VPSMITH TRAVEL RESEARCH
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• Agenda
• Total US Overview
• Resort Locations
• Destination Resorts
• Condo Hotels
• Total US Projections

3
Total United StatesEstimated Revenue and
ProfitabilityYears 1999 2005P
Life is good !
4
U.S. Lodging Industry - Key StatisticsLatest 12
Months - January 2006

• Change
• Hotels 47,735 0.6
• Rooms 4.4mm 0.3
• Occupancy 63.3 2.9
• A.D.R. 91.28 5.5
• RevPar 57.76 8.6
• Room Revenue 94B 9.0

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Total United StatesRoom Supply/Demand Percent
ChangeTwelve Month Moving Average 1989 to
January 2006
3.3
0.3
Cyclicality Clearly Visible Recent S/D
Imbalance Spells Opportunity
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Total United StatesOccupancy/ADR Percent
ChangeTwelve Month Moving Average 1989 to
January 2006
Divergence?
Divergence
If History Repeats Itself, Strong ADR Gains are
Here to Stay
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Total United StatesOccupancy Percent, Average
Daily Rate, RevPARTwelve Month Moving Average
1989 to January 2006
91.28
86.36
63.3
64.9
Robust OCC and ADR Gains post 9/11
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STR Chain ScalesSelected chains from each segment

• Luxury Four Seasons, Ritz Carlton, Fairmont, W
  Hotels
• Upper Upscale Doubletree, Hilton, Hyatt,
  Sheraton
• Upscale Hilton Garden Inn, Courtyard, Crowne
  Plaza, Radisson
• Mid with FB Holiday Inn, Ramada, Best Western,
  Quality Inn
• Mid no FB Comfort Inn, HI Express, Country
  Inns Suites
• Economy Motel 6, Days Inn, ESA, Travelodge,
  Ramada Limited

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Chain ScalesSupply/Demand Percent ChangeTwelve
Months Ended January 2006
Business Traveler Drives Demand for Big Boxes
10
Chain ScalesOccupancy/ADR Percent Change Twelve
Months Ended January 2006
Above Inflation Rate Growth Across all Chain
Scales
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Chain ScalesRevPAR/Room Revenue Percent Change
Twelve Months Ended January 2006
Life is Good!
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• Agenda
• Total US Overview
• Resort Locations
• Destination Resorts
• Condo Hotels
• Total US Projections

13
Resort Locations Key Statistics12 Month Moving
Average January 2006

• Change
• Hotels 3,890 -2.5
• Room Nights 214.6 m -1.8
• Demand 143.3 m -0.8
• Occupancy 66.7 1.1
• ADR 127.06 6.0
• RevPAR 85.11 7.1
• Room Rev 18.3 b 5.2

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Resort LocationsRoom Supply/Demand Percent
ChangeTwelve Month Moving Average 1989 to
January 2006
-0.8
-1.8
Supply Increase Used to be Somewhat Constant
Until 9/11
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Resort LocationsRoom Demand Percent Change
PeaksTwelve Month Moving Average 1989 to
January 2006
42 months
48 months
48 months
Demand Peaks Every 48 months Or Does it?
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Resort LocationsOccupancy/ADR Percent
ChangeTwelve Month Moving Average 1989 to
January 2006
Despite Decreasing OCC Growth, ADR Growth Should
be Here to Stay
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Resort LocationsOccupancy Percent, Average Daily
RateTwelve Month Moving Average 1989 to
January 2006
Jan 2006 127
July 2001 115
July 1997 69.1
Jan 2006 66.7
OCC ADR Rebound after 9/11 but OCC still has
a way to go
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ResortsDay of Week Analysis Occupancy 2003 -
2005
Nice Increases Midweek - but Have Weekends Peaked?
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ResortsDay of Week Analysis ADR 2003 - 2005
8 Rate Growth Across the Board a Good Sign
for 2006
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ResortsGroup vs. Transient ADR 2003 - 2005
Group Rate Growth Lags Transient Rate Growth
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ResortsDay of Week ADR - Group 2003 - 2005
2005 vs 2004 Moderate Daily Rate Growth (3)
For Groups
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ResortsDay of Week ADR Transient2003 - 2005
2005 vs 2004 Healthy Rate Increases Across All
Days (10)
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• Agenda
• Total US Overview
• Resort Locations
• Destination Resorts
• Condo Hotels
• Total US Projections

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Destination Resort Key Statistics12 Month Moving
Average January 2006

• Change
• Hotels 317 1.0
• Room Nights 57.7m - 0.5
• Demand 38.8 m 1.2
• Occupancy 67.3 1.7
• ADR 182.98 6.3
• RevPAR 123.14 8.1
• Room Rev 7.1 b 7.6

0.7 of US Hotel Supply generates 7.6 of US
Rooms Revenue
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Destination ResortsRoom Supply/Demand Percent
ChangeTwelve Month Moving Average 1989 to
January 2006
1.2
-0.5
Segment Always Attracts New Supply Except in
the Most Recent Past
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Destination ResortsOccupancy/ADR Percent
ChangeTwelve Month Moving Average 1989 to
January 2006
Above 6 Rate Growth Lasts Not Forever But for
Now
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Destination ResortsOccupancy Percent, Average
Daily RateTwelve Month Moving Average 1989 to
January 2006
Jan 2006 182
July 2001 171
May 1997 70.6
Jan 2006 67.3
Still Room For Improvement Post 9/11 in Both
Measures
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Destination ResortsMonthly Occupancy2000 vs.
2005
76.8
75.8
In the Off Season, Year 2000 Still Is the
Benchmark To Beat
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Destination ResortsMonthly ADR2000 vs. 2005
-6
14
December Rate Differential Still 6
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Destination ResortsDay of Week Analysis
Occupancy 2003 - 2005
Strong Long Weekends (Thu Sat) But Have
Fr/Sat Reached Their Peak?
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Destination ResortsDay of Week Analysis ADR
2003 - 2005
Second Part of the Cycle Rate Increase 04/03
2 - Rate Increase 05/04 6
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• Agenda
• Total US Overview
• Resort Locations
• Destination Resorts
• Condo Hotels
• Total US Projections

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Definitions

• Condo Hotel RoomsRooms placed in Rental Pool
• ResidencesRooms not placed in Rental Pool

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Total U.S.Summary of Condotel Pipeline March
2006

• 229 Projects with a total of 98,142 reported
  rooms
• Rooms are broken out as follows ( of total)
• Hotel Rooms 34,166 35
• Condo Hotel Rooms 48,678 50
• Total Affecting Nightly Room Supply 82,844
  85
• Non-rental Residences 13,938 14
• Timeshare Rooms 1,360 1
• Some projects have not yet reported room counts

Source STR Condotel Pipeline, part of the STR /
TWR / Dodge Construction Pipeline
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Total U.S.Top 10 Condotel MSAsMarch 2006
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Annual Occupancy 2003 - 2005Total US vs. Condo
Hotels vs. Destination Resorts

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Annual ADR 2003 - 2005Total US vs. Condo Hotels
vs. Destination Resorts

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CondotelData Reporting Topics

• Reporting Availability
• Static vs. Fluctuating Rooms Available
• Reporting Rooms Sold
• Issue Owner Occupied, Non-Revenue Generating
  Rooms
• Reporting Rooms Revenue
• The Rule No Restatements after 120 days
• Comp Set Issues
• Choosing a Condotel in your Comp Set will likely
  do more harm than good

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• Agenda
• Total US Overview
• Resort Locations
• Destination Resorts
• Condo Hotels
• Total US Projections

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Lodging Industry Issues

• Supply Growth Remains Benign Construction
  Costs, Condo Conversions
• Higher Operating Costs Insurance, Labor,
  Amenities, Energy
• Solid Demand Growth Degrees of Good, Some Not
  So Good
• Changing Demand Experience Travel, Baby
  Boomers
• Occupancy Growth Slows Varies Widely by
  Market
• Aggressive Pricing Could Double CPI, Control
  of Internet Pricing
• Transportation Problems Troubled Airlines,
  Gasoline, Infrastructure
• Higher Industry Profits More Difficult for
  each Property
• Global Issues Terrorism, Bird Flu, Currency
  Fluctuations
• Outlook Great till 08?

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U.S. Economic OutlookBlue Chip Economic
Indicators March 2006

• 2005A 2006F 2007F
• Real GDP 3.6 3.4 3.0
• CPI ( Inflation) 3.4 2.9 2.4
• Corporate Profits 17.1 9.5
  4.6
• Disp Personal Income 1.5 3.5 3.2
• Unemployment Rate 5.1 4.8 4.7

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Total United StatesSupply/Demand Percent
Change2002 2006P
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Total United StatesOccupancy Percent Change2002
2006P
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Total United StatesOccupancy Percent2002 2006P
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Total United StatesADR Percent Change2002
2006P
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Total United StatesReal Room Rates (Base Year
2000)Year End 2000 - 2005
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Total United StatesNominal Room Rates2000
2006P
If Yr. 2000 Rate Had Grown at 3 over 6 years
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Total United StatesRevPAR Percent Change2002
2006P
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Thank You for Your Attention! jan_at_smithtravelres
earch.com www.smithtravelresearch.com